Tuesday, 1 December 2015

Strong dollar, U.S. rate hike prospects keep pressure on gold

Gold clung to small overnight gains on Tuesday but was within striking distance of a nearly six-year low, pressured by a robust dollar and a looming U.S. interest rate hike.


* Spot gold was little changed at $1,064.66 an ounce by 0036 GMT, after gaining 0.5 percent on Monday.
* But the metal wasn't far from $1,052.46, its lowest since Feb. 2010 hit last week. Bullion also posted its biggest monthly drop in 2-1/2 years in November with a 7-percent decline.

* Investors have been positioning for a U.S. rate hike, expected this month at the Federal Reserve's Dec. 15-16 policy meet, by selling non-interest-paying gold.

* The dollar, on the other hand, was on the cusp of reaching its highest in nearly 13 years against a basket of currencies on Tuesday, piling more pressure on greenback-denominated gold.

* A U.S. payrolls report on Friday will be closely watched for clues about the strength of the economy and its impact on the Fed's monetary policy. A strong number, after a surge in job growth in October, could cement expectations that the U.S. central bank will deliver its first hike in almost a decade.

* Hedge funds and money managers raised their net short position in COMEX gold contracts to the biggest on record in the week to Nov. 24, U.S. Commodity Futures Trading Commission data showed on Monday.

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